VAT implications of the importation of intangible goods and services

8 October 2026

As a general rule, legal entities resident in Mexico that acquire goods or engage services from foreign residents without a permanent establishment in Mexico should pay close attention to the Value Added Tax (VAT) treatment applicable to such transactions. This is because the importation of intangible goods and services triggers what is commonly known as virtual VAT or hypothetical VAT.

Mexican tax legislation provides that taxpayers importing goods or services must account for the corresponding VAT at the time the consideration for the imported good and/or service is effectively paid. The legislation also allows such VAT to be recovered as input VAT in the same monthly tax return in which it becomes payable. Accordingly, where the VAT is fully recoverable, the VAT arising from the importation of intangible goods and services may be offset in the same period, resulting in a net nil effect, as illustrated in the example below:

Concept	Amount
VAT due on the importation of intangible services (16%)	$20,000
Recoverable VAT (Virtual or Hypothetical VAT at 16%)	$20,000
VAT payable for the month	$0

However, it should be noted that, even where the net effect of offsetting virtual or hypothetical VAT against the VAT due is nil and does not initially result in any VAT payable, the transaction must still be properly recognised as part of the taxpayer’s ongoing tax compliance obligations. This includes the accurate completion of the monthly definitive VAT return (DyP) and the Informative Return of Transactions with Third Parties (DIOT).

In addition, the deductibility requirements for Income Tax (ISR) purposes must be satisfied, particularly regarding the commercial substance of the transaction and compliance with the specific requirements applicable to the supporting tax documentation. This ensures the tax symmetry established by the legislation between VAT and Income Tax.

Consequently, if the virtual or hypothetical VAT cannot be recovered due to a lack of the transaction substance or because the applicable Income Tax requirements have not been met, the mechanism ceases to be tax-neutral and a VAT liability could be triggered.

We recommend that companies review payments made to foreign residents on a monthly basis, identifying the nature of the services received, the VAT arising on the importation of intangible goods or services, the recognition of virtual or hypothetical VAT within the relevant monthly compliance process, and the fulfilment of deductibility requirements for Income Tax purposes.

At Forvis Mazars, we remain at your disposal to assist with any questions or support you may require in relation to these matters.